Regulation
Italy to publish guidelines for implementing EU rules
The Italian central bank is set to publish guidelines for the implementation of the new European Union regulation on cryptocurrencies. Governor Fabio Panetta announcement that the guidelines will aim to ensure the effective application of the EU’s Markets in Crypto-Assets (MiCA) Regulation while protecting cryptocurrency holders.
Panetta’s speech to the Italian Banking Association highlighted the risks and differences within the crypto-asset market. He stressed the need for regulation, particularly for stablecoins, which are digital assets pegged to a portfolio of reserve assets such as currencies, deposits or securities.
Without strict regulation, these stablecoins could face massive redemptions if their holders lose confidence. Uncollateralized cryptoassets like Bitcoin or Ethereum, which have no intrinsic value or income generation, pose significant risks due to their volatility and the opaque and informal channels on which they are often traded.
Risks and categories in the cryptocurrency market
Highlighting the potential dangers, Panetta noted that these unsecured assets are often held by individuals seeking speculative gains, sometimes to evade tax and anti-money laundering regulations. Their value, often disconnected from fundamentals, can fluctuate wildly, making them unsuitable as a reliable means of payment, store of value or unit of account.
Although they currently represent only a small part of the market, unsecured crypto assets held by unsuspecting investors could increase, particularly in emerging markets. The EU’s MiCA framework, which will be fully implemented this year, aims to mitigate these risks by establishing specific rules for different types of digital tokens.
The MiCA law distinguishes between single-currency e-money tokens (EMTs), multi-asset asset-referenced tokens (ARTs), and uncollateralized digital assets. While EMTs and ARTs are considered stablecoins subject to strict regulatory requirements, uncollateralized assets and utility tokens are primarily subject to prior notification requirements.
Panetta said that these new regulations will finally bring the cryptocurrency market under control, although much remains to be done because the sector is too complex and rapidly evolving. The risk of managing stablecoins on unreliable platforms, especially outside Europe, would further underline the need for solid financial and operational risk management for traditional and non-traditional financial intermediaries.
Related Readings | Cardano 9.0 Unleashes On-Chain Governance